Robust data managament becomes a necessity

Forthcoming legislation requires stricter financial reporting from the property industry. Taliance believes that companies without reliable, centralised data will struggle to comply.

The primary reason for maintaining meticulous data management is competitive advantage. Ensuring that the data generated from property management activities flows smoothly and effortlessly upwards through an organisation, to inform those at the asset management and fund management level, will enable that company to react faster to market forces than its competitors, winning the hearts of investors along the way. Taliance software, such as FinAsset and more recently Global Fund has been developed to do just that - empower asset and fund managers with the information they need to attract and maintain investors.

Now, stringent legislative change is challenging the industry’s historically relaxed attitude towards data management and compelling property companies to consider installing these Taliance solutions. The  Alternative Investment Fund Managers (AIFM) Directive comes into force in 2014, and changes to the International Financial Reporting Standards (IFRS/FASB) take effect in 2013. In both cases, companies wishing to comply should prepare well in advance.

The AIFM Directive

The AIFM Directive introduces a harmonised European regulatory regime for managers of Alternative Investment Funds. AIF managers, both EU and non-EU, will have to apply for authorisation in order to keep trading, but in return they will be granted a ‘passport’ that enables them to market their funds throughout the European Union under just a single authorisation.
To gain authorised status, AIF managers need to comply with a wide range of provisions including greater transparency when reporting to regulators and investors. Greater emphasis will be placed on regular and accurate valuation of AIF assets, and an AIF manager who administers an AIF that uses leverage on a ‘systematic basis’ will come under additional scrutiny.
The sophisticated level of data recording, modeling and reporting that Global Fund and FinAsset offer will prove invaluable to fund managers who wish to comply with the AIFM Directive, but who do not want to drown in a sea of spreadsheets.

The new IFRS/FASB regime

Changes to way that leases are regarded under the new IFRS/FASB regime also require greater clarity. This new standard is intended to improve the transparency of lease accounting and decrease its complexity. Currently, lease commitments often fail to appear on the balance sheet of lessees, giving a false impression of a company’s true liabilities and gearing.
Broadly speaking, from 2013, commercial leases in the developed world will be considered to be capital leases, despite the industry previously structuring the majority of them as operating leases to avoid ‘grossing up’ balance sheets, which would have negatively impacted the ratios monitored by investors.
The switch to capital leases will necessitate accurate, centralised, and standardised lease data. The new accounting rules are too complex, and the non-compliance risk too great, for calculations to be run on an ad hoc basis.

Regardless of whatever overhead legislation demands in the future, the real reason for installing a data management system should remain competitive advantage.
“Compliance should never be the primary reason for purchasing a system,” said Bob Marsh, managing director, Taliance UK. “It should be one of the reasons why a system is considered for purchase, and it could be a deciding factor that triggers the release of the budget.  But the motivation has to be what it provides as a system – granularity of data, faster reporting cycles and the development of clearer,  cleaner scenarios informing and enabling decision makers and investors alike. Property investors, owner operators in real estate and real estate fund managers must understand the risks of their investment better.”

Taliance Ltd

Southbridge House | Southbridge Place
Croydon Surrey CR0 4HA
United Kingdom
Phone: +44 (0) 208 240 4499

---